Markets Shrug Off Trade War Fears

Daily Analysis - 06/06/2018

Aussie Boosted by GDP

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The Australian dollar was again the main focus in the FX markets, as upbeat Australian GDP data helped give a boost to the Aussie. Crude oil is up for a second day, ahead of important data that will show U.S. inventories for the previous week. The dollar was broadly weaker against most of its major counterparts as risk sentiment is on. In the equity space, Asian market followed on from Wall Street and pushed higher as trade war fears and other geopolitical worries have eased.

This Time Aussie Bounces


AUD/USD is back to Monday’s highs near $0.7670 after recouping losses made on Tuesday following the RBA meeting. Today’s GDP for Q1 came in stronger at 1% versus 0.9% expected. The year-on-year number is now at 3.1% versus 2.8% expected. Monday’s strong retail sales numbers gave a hint that today’s GDP figure would be good.

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Loonie Gains on NAFTA Headlines


USD/CAD fell sharply on Tuesday on some news of possible bilateral “side” deals between the U.S. and each NAFTA member separately. (Canada and Mexico). This comes after President Trump ended exemptions to steel and aluminium tariffs on Canada and Mexico last week.

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Oil Recovers


Crude oil bounced off one month lows yesterday. Prices had fallen on reports that the U.S. asked Saudi Arabia and some other OPEC producers to raise oil output. However, WTI oil jumped back up after the API data showed crude inventories fell by 2 million barrels in the week to June 1 to 432.8 million. This was more than the forecast of a drop of 1.8 million barrels. The focus now turns to today’s EIA crude oil inventory report. (see calendar for forecasts)

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